According to the provisional estimate released by the Romanian Statistical Office, Romanian GDP recorded growth of 1.1% YoY in Q3 (unadjusted series), while in the 9M 2024, it recorded an increase of 0.8% compared to the same period last year. Meanwhile, for the seasonally-adjusted series, GDP contracted by 0.3% YoY in Q3. On a QoQ basis, the also GDP contracted slightly by 0.1%. At current prices, this would mean that the Romanian GDP amounted to RON 1.31tn (EUR: 264.5bn).
The latest estimate for the Romanian GDP growth has been released by the Romanian Statistical Office, and while growth has been recorded on a YoY basis, the QoQ basis does indicate a slowdown. In total, GDP grew by 1.1% YoY in Q3, while it contracted by 0.1% QoQ. At current prices, this would mean that the Romanian GDP amounted to RON 445.6bn (EUR 89.7bn) in Q3, while in the 9M 2024, it amounted to RON 1.31tn (EUR 264.5bn). Lastly, on a TTM basis ending in Q3 2024, the Romanian GDP amounted to RON 1.73tn (EUR 348bn), representing a nominal increase of 6% compared to the same period last year.
Seasonally adjusted quarterly YoY GDP development (Q1 1996 – Q4 2024, %)
Source: Romanian Institute of Statistics, InterCapital Research
Meanwhile, the 0.8% increase during 9M was driven by several factors. Looking at the categories, Wholesale and retail; motor vehicles, and motorcycles repair; transport and storage; hotels and restaurants, with a 21% share in GDP, contributed 0.4 p.p. to GDP growth, driven by higher activity volume of 1.9%. Professional, scientific, and technical activities, activities of administrative services, and support services, with an 8.8% share in GDP, contributed 0.1 p.p. to GDP growth on the back of a 1% volume increase.
Shows, culture, and recreational activities; repair of household goods and other services, with a 3.3% share in GDP, contributed 0.2 p.p. to the GDP growth, due to a 7.1% increase in volume activity. Lastly, a 0.9 p.p. contribution to the GDP growth came from net taxes on products, which recorded a 10.6% higher volume YoY.
On the other hand, negative contributions to the GDP happened in the following categories: Agriculture, forestry, and fishing, with a 3.9% share in GDP, contributed a negative -0.6 p.p. to GDP growth, due to a 12.8% decrease in activity volume. Industry, with a 17.4% share in GDP, contributed a negative 0.1 p.p., due to a 0.4% decrease in volume. Lastly, real estate activities, with a 7.3% share of GDP, contributed a negative 0.1 p.p., due to a 1.4% lower activity volume.
Another breakdown to look at is the GDP components. Final consumption expenditure of households, contributed 3.4 p.p. to GDP growth rate, with a 5.5% higher activity volume. Gross fixed capital formation, also contributed positively with a 0.8 p.p. increase, due to a 3% higher volume. On the other hand, individual final consumption of the General government recorded a 2.7% drop in volume activity, leading to a -0.2 p.p. GDP contribution. A similar case is present with collective final consumption, which also contributed -0.1 p.p. to GDP growth, due to a 1.3% drop in volume.
Lastly, net exports contributed -2.8 p.p. to GDP growth, due to a 3% decrease in the volume of exports of goods and services, while at the same time, the volume of imports of goods and services grew by 3.2%.
Taking all of this into account, what can be said about the Romanian economy at the moment? A high inflation rate (above the EU average, also spurred by Romania’s own currency usage as compared to the euro) is still present in Romania. Combined with the still elevated interest rates on loans, you get a market dynamic that could explain many of the changes. For example, a drop in industrial activity, combined with stagnation in construction and a slight decrease in real estate sectors, could all be generally related to higher borrowing costs for companies on the one hand. On the other, it is also related to the somewhat subdued demand for goods (as can be seen by exports, although this only affects export-orientated companies), as well as higher general costs due to inflation for citizens, which combined with higher loan interest rates, results in a slowdown in the real estate sector. Household consumption remains the largest driver of GDP growth, and with continued inflation and real wage growth, this should continue in Q4, especially as it is the holiday season. Gross fixed capital formation does imply there are investments being made, mostly in infrastructure supported by the EU funds. The recent uncertainty regarding the presidential elections, as well as the proximity of the country to the conflict in Ukraine is also providing a certain level of volatility. Overall, the GDP growth has been above the developed EU countries, but well below regional peers, especially in the SEE and CEE region.
